Wesfarmers: Structure, Strategies, Impact, and Recommendations

This report provides a comprehensive analysis of Wesfarmers' organizational structure and its impact on the company's performance and management innovation. The report begins with an introduction to the importance of organizational structure and strategies in fostering business growth and competitive advantage, followed by an overview of Wesfarmers' hierarchical structure, including the roles and responsibilities of different levels of management. The report then delves into the company's strategies, including its focus on value creation, operational excellence, and customer satisfaction. Furthermore, the report examines the impact of Wesfarmers' organizational structure on management innovation and business performance, highlighting both the advantages and disadvantages of the hierarchical structure. The analysis covers aspects such as specialization, communication, and employee motivation. Finally, the report concludes with recommendations for improvement, suggesting that the company consider adopting a flatter organizational structure and encouraging employee participation in decision-making to further enhance innovation and performance. The report emphasizes the importance of aligning the organizational structure and strategies to achieve long-term success and sustain a competitive edge in the market.

[ Organizational Structure And Effectiveness ]
2019
Student’s Name

Organizational structure and effectiveness 1
Executive Summary
The structure and the strategies of the organization majorly affect the functioning of the
organization. It allows the business to incubate the learning culture and develop innovative
strategies that help the business in growing and sustaining its competitive advantage. The
report will reflect upon the structure and the strategies adopted by Wesfarmers and its impact
on business performance and management innovation.

Organizational structure and effectiveness 2

Organizational structure and effectiveness 3
Contents
Introduction................................................................................................................................3
Organization structure and strategies.........................................................................................3
Organization Strategies..............................................................................................................4
Impact of company structure on management innovation.........................................................5
Impact of company structure on business performance.............................................................7
Recommendations......................................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................10

Organizational structure and effectiveness 4
Introduction
The successful exploitation of ideas and the adoption of innovative strategies allow the
organization to grow its business and sustain its competitive advantage in the competitive
business environment. The innovative business strategies allow the organization to face the
completion and satisfy the changing expectations of the customers. It is also analyzed that the
changes in the organization structure promote open communication and incubates a positive
organizational culture. It allows bringing efficiency in operations and effectively reducing the
impact of challenges in the business environment (Kilroy and Schneider, 2017). The
additional paragraphs of the report will reflect upon the organization structure and the
strategies adopted by Wesfarmers. It will also reflect the impact of organizational structure
and strategies on company performance. It will also highlight the recommendations for
improvement in company performance.
Wesfarmers is one of the largest listed companies in Australia that operates in diverse
businesses i.e. liquor, supermarkets, hotels and convenience stores, home improvement,
office supplies, department stores. In the Industrials division, it operates its businesses in
chemicals, energy and fertilizers, industrial and safety products and coal. The company
employs 217000 employees and has attained a net profit of $2772 m in the year 2018 through
the adoption of innovative strategies and maximizing the satisfaction of customers
(Wesfarmers, 2019).
Organization structure and strategies
It is analyzed that Wesfarmers adopts a hierarchical structure under which the top hierarchy
consists of directors followed by managers and regional managers. The next level in the

Organizational structure and effectiveness 5
hierarchy is of team managers and the last constitutes employees who are directly
accountable to the team managers of their respective departments. The information in the
hierarchal structure flows from top to bottom. The hierarchical structure provides clarity in
the roles mam responsibilities and also allows the business to maintain the consistency level
in the Australian business market. It allows effective supervision of all the departments in the
organization (Kotler et al, 2015).
(Source: Wesfarmers, 2019)
Wesfarmers adopts a hierarchical structure under which the topmost level consists of the
eight executive directors who applies their skills, knowledge, and experience for performing
the role of decision making. The topmost level is supported by the manager and the regional
manager operates the regional offices and plays an authoritative role in the organization. The
next level in the hierarchy consists of team leaders who supervise the actions and ensures that

Organizational structure and effectiveness 6
the job is done appropriately. The last level of organization structure consists of employees
who are directly accountable to the team leaders (Albers, Wohlgezogen and Zajac, 2016).
This hierarchical structure provides a clear picture of the authorities and describes the clear
lines of communication. Each member of the organization is aware of who the person has to
be accountable. This structure also reduces the pressure on the entry-level workers because
the decision-making lies in the hand of top-level hierarchies. The hierarchical structure
allows creating a specialisation in the respective areas and brings operational efficiency
(Yang and Ng, 2015).
Organization Strategies
Wesfarmers focuses on adopting value-creating strategies under which the company
diversifies its portfolio and encourages entrepreneurial initiatives to drive innovation in the
company. The company focuses on operational excellence and satisfying the needs of the
customers. The company creates a robust financial capacity to create competitive costs and
provides access to the capital. It incubates empowering a culture that allows the employees to
be proactive and create value for the business (Tolbert and Hall, 2015).
To achieve the organization's objectives, the company provides the divisional autonomy and
aligns the values and strategies for driving the performance of the organization. It focuses on
the active management of the portfolio through regular evaluations and reviewing the
portfolio. The company focuses on expanding its relationships and partnering for the
strengthening of the business development capacity. The company has advanced its analytics
center and the digital capacity to grab the opportunities lies in the external environment and
allocates the capital accordingly for maximizing the value of the shareholders (Kalay and
Lynn, 2016).

Organizational structure and effectiveness 7
The company is highly committed towards social responsibility and maintains respectful
relationships with the supplier. The company engaged in the ethical sourcing of raw material
and provides more exposure to diversity inclusion and creating safe workplaces. It creates
value for the customers and the shareholders by driving innovation in the company and
leveraging the best practices that lead to operational excellence (Sands, Lee, Rae and
Gadenne, 2015)
Wesfarmers applies bold growth strategy that focuses on the online expansion of business
through its “click and collect” and “Flybuys” integration. It allows expanding the customer
base and advancing the growth of the business (Wesfarmers, 2019).
Impact of company structure on management innovation
The concept of management innovation focuses on incubating the process, practices and the
structure that are novel for developing the learning environment and adoption of the
technologies that help in advancing the business and achieving operational efficiency.
Adoption of the hierarchical organization structure allows the company to create a proper
chain of command and reduces the interpersonal and interdepartmental conflicts. It clearly
species the job roles and avoid multiplication of work which in turn facilitates the company
to advance its productivity and drive innovation in its organization process and system
(Beech and MacIntosh, 2017).
The hierarchical structure of Wesfarmers allows creating specialization and effective
management of the resources for improving the organization's efficiency and allows the
employees to concentrate more on their management function and adopt the new technologies
for advancing the business. The adoption of hierarchical structures creates an opportunity for
the career advancement of the employees. This scope incubates the desire among the

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employees to improve their performance and attain higher positions in the company (Kalay
and Lynn, 2016).
The adoption of hierarchal structures helps the members to concentrate more on the external
environment opportunities and threats and develop the skills for the adoption of new
technologies. The clarity in the communication structures helps in the quick execution of the
organization strategies and achieves operational efficiency (Beech and MacIntosh, 2017).
The top-level management hierarchy consists of the executives who possess the skills and the
capabilities of analyzing the external environment and takes productive decisions for the
company. It allows maintaining the transparency in operations and eliminating the issue of
indecisiveness which protects the efficiency of the business and helps in delivering value to
the customers. The entry-level workers get the opportunity to develop their skills and explore
the opportunities that lie in the external environment. This, in turn, helps the company in
creating long term value and advancing its business operation (Qian, Kaur and Schaltegger,
2018).
In contrast to the benefit of hierarchical organization structure, it also creates a higher level of
bureaucracy and unequal treatment within the employees which in turn reduces employee
satisfaction and restricts them to initiate changes in the organization. The decision–making
power to the topmost hierarchy may restrict innovation because the higher-level members
discourage the initiatives of employees for internal innovation (Qian, Kaur and Schaltegger,
2018).
Impact of company structure on business performance
The hierarchical organization structure helps Wesfarmers in attaining department loyalty and
actively responds to the internal and external challenges faced by the company. The higher

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level of managerial involvement creates pressure on the employees to fulfill their
responsibilities and focuses on achieving the organizational objectives. The company focuses
on making structural improvements and allowing them to be more committed towards the
organization's goals (Chang, Yeh, and Liu, 2015).
It allows for the proper execution of the ideas and allows the employees to concentrate more
on operational activities. The specialization in the respective departments allows them to
become more committed towards the organization's goals and develop innovative solutions
for the company. It streamlines the communication process and allows for communication in
both directions. An effective chain of command allows the effective distribution of tasks and
allows the company to concentrate on the activities that maximizes the value of the
shareholders (Chang, Yeh, and Liu, 2015).
The hierarchical structure of the company facilitates internal communication and allows the
administrative structure to perform the functions effectively and streamlines the processes of
business that help in the effective achievement of the organization's goals. It allows creating
promotional pathways for the employees and making them more committed with the desire of
achieving higher positions in the hierarchy. The allotment of authority makes the tighter
control over the actions of the employees and the deviations in the performance are controlled
and are integrated towards the achievement of the common goals of an organization (O’Neill,
Sohal and Teng, 2016).
Wesfarmers is able to develop a value creation strategy and diversify its portfolio by
strategizing its priorities and proper allocation of the capital. The adoption of a hierarchical
structure promotes the development of the employees. It helps in creating specialization and
providing training for driving innovation that allows the firm to gain a competitive advantage.

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The innovation in the business process helps in effectively facing the challenges in the
external environment and maintains the internal learning environment (Oyewobi et al, 2016).
In contrast to the above, it is analyzed that the hierarchical structure keeps tighter control over
the employees and restricts their actions to maintain consistency at the organization. This, in
turn, decreases the level of employee motivation and directly impacts the productivity of the
organization. The employees feel discouraged and restrict their commitment towards the
adoption of creativity and driving innovation in the organization. It is analyzed that the
hierarchical structure creates high prominence of the different functionalities, the
personification of the responsibilities and leads to conflicting disagreements among the
employees and restricts them to adopt new innovation that directly affects the business
performance (Oyewobi et al, 2016).
Recommendations
In order to sustain the competitive advantage in the competitive business environment, the
company must focus on adopting the flat organization structure that allows easy flow of
information and make the employees more proactive towards the adoption of the new
technologies. The company must encourage the participation of its employees on decision
making and incubating creative ideas for the growth of the business. Wesfarmers must
provide training to adopt the latest technologies and must incubate the learning environment
for continuous advancement in the operation and development of new products and services
(Nwachukwu and Chladkova, 2019).
It must design an innovative remuneration system and must provide flexibility to the
employees to increase their level of motivation and leaving a positive impact on the business
performance of Wesfarmers. It will help in making the employees committed to enhancing

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the long-term value of the shareholders and enabling the growth of the company in the
complex global environment (Nwachukwu and Chladkova, 2019).
Conclusion
From the above discussion, it is crucial to note that the organization structure plays a major
role in driving innovation in the organization and directly impacts business performance.
From the above analysis, it is recorded that Wesfarmers adopts a hierarchical structure under
which the topmost level consists of the executives and directors who applies their skills,
knowledge, and experience for supervising the actions of all the members and involves in
decision making that drives innovation in the company. This hierarchal structure allows the
company to create promotional pathways for employees and makes them more dedicated to
the organization's goals.
It is analyzed that the hierarchical structure makes a positive impact on organization
performance by aligning the efforts and tighter control over the action of employees. It
facilitates internal communication and allows the proper allocation of the capital to develop a
competitive edge over its competitors. Wesfarmers focuses on strategically allocating the
funds and developing strategies that drive innovation in the company and attaining the
organizational objectives through the adoption of hierarchical structure. It allows the
company to supervise the activities of all the departments and make the changes that allow
sustaining the competitive edge over its competitors.